Pharma firm says licensing deals to boost profits

RESEARCH company Merrion Pharmaceuticals is confident that licensing deals due to progress in 2011 will see it turn mild recent losses into significant profits.

Merrion yesterday reported losses before taxes of €2.51 million for the year to December 2010, up 55% on 2009. Revenues for 2010 were down 16% to €4.67m. Operating losses were up 31% to €2.35m. Its loss per share was 15c, up 50%.

However, Merrion chief executive John Lynch said that its license agreements with diabetes specialist Novo Nordisk alone could deliver revenues in excess of US$100m (€72m) on the achievement of certain development, regulatory and sales milestones. This is just one of a list of research trials likely to evolve this year.

Stock market analysts reacted positively to the yesterday’s report from Merrion, noting that its recent option agreement with diabetes specialist Novo Nordisk, its feasibility study with Rebel Pharma and its phase three trials with the FDA on its own breast cancer treatment Orazol were more significant than the mild 2010 losses.

Davy stockbroker Aideen O’Donnell said: “In 2010, Merrion expanded its partner portfolio and has further deepened its relationship with Novo Nordisk. We note that progress is encouraging at this point.”

Under its deal with Novo Nordisk, Novo will be invited to acquire €1.5m shares in Merrion at a set price once the licence agreement is signed, and can require Novo to acquire €500,000 more in shares.

Significant revenues are also likely to arise from Merrion’s research work with Rebel Pharma on two undisclosed compounds, plus its feasibility and option agreement for three compounds with an unnamed international ‘top 10’ pharma company.

Merrion chief executive John Lynch said: “The hard work carried out in 2010 has set us in good stead for the next year. In the last quarter of 2010, Merrion signed pre-license agreements with two new partners and with Novo Nordisk for a new compound. Work on these is underway and we are pleased with progress to date.

“There are other license opportunities in the company’s own portfolio and in existing partner programmes. We are hopeful some of these will become full license agreements following the results of the feasibility work.”